Groupon founder Andrew Mason has had a lot of explaining to do this week as he met investors hoping to get them on board for a flotation of his online discounts company.

In less than 18 months Groupon has gone from being championed in Forbes magazine as "The Fastest Growing Company Ever," to a company top analysts are calling a busted flush. Back in December Mason snubbed a $6bn (£3.7bn) offer from Google for his two year old firm when investors were valuing the business at more than $20bn. Then it all went wrong.

Regulators criticised its accounts, top execs quit and critics piled in. Groupon pulled plans for one of the biggest initial public offerings in years. Now it's back with a discount price offer of its own.

Perhaps as soon as Friday Mason, 30, is hoping to sell 30m shares, or less than a 5% stake, at between $16 and $18 each, raising up to $540m, according to a regulatory filing. The price will value Groupon at about $10.8bn – half what it was supposed to be worth at the start of the year. It also means Mason is no longer a paper billionaire, at the new price his share in the company is worth $844m at the top end of the range.

To listen to Mason's critics, the firm and his holding are not even worth that. Some 30 million people worldwide subscribe to Groupon's daily deals email offering discount to local businesses from restaurants to yoga classes. In two years it has become by far and away the leader in its category and has expanded to 43 countries.

Sucharita Mulpuru, Forrester Research analyst, is unimpressed: "Groupon is an email list, and a bad one at that," she says. Even the $6bn Google reportedly offered for Groupon last December was too high a price, said Mulpuru.

"Netflix has subscribers, Lovefilm has subscribers, they are paying customers. Groupon has an email list.Fewer than 30 million people have bought a Groupon ever. And all you know about those people is that they are prepared to buy something at half price, that's not such valuable information. You could get better information from any department store," she said.

As far as Mulpuru is concerned Groupon is a company that is about to hit a wall, growth is slowing and growth was all it had. "The whole Wall Street/start-up culture is based on a handful of metrics and a story. People looked at Groupon and got all ga ga about this growth rate. It might be costing $1.50 to make $1 but look at the growth," she said.

After all its recent setbacks she said investors may be thinking: "At $20bn it was totally ridiculous, at $10bn, well maybe Andrew Mason is the new Jeff Bezos [Amazon's founder], he didn't really have a plan to start off with," she said. "Well good luck with that."

Many of Groupon's problem are of its own making. Two seasoned executives, one from Yahoo, the other from Google, have quit the chief operating officer role in the last 18 months. The latest, former Google sales vice president Margo Georgiadis, resigned after five months and her departure coincided with Groupon's announcement that it was restating its revenue dropping it by around half.

Then Mason ran into trouble with regulators after he wrote a 2,500-word email to the staff defending Groupon against critics that was leaked to the press in what some argued was a violation of the "quiet period" rules that surround companies planning an IPO. The company had to pull its original IPO plans. But other larger forces have also been at work as the European financial crisis has rocked stock markets across the world and reigned in many other IPOs.

David Sinsky, general manager of data at Yipit, a site that aggregates daily deals from a variety of providers, believes there is plenty of room for growth for Groupon. "There are a lot of opportunities for this company," he says. "Local merchants are very happy with their daily deals. More than 70% are happy with their experience, according to our research," he said. In the last quarter they have expanded into new categories, including music in a deal with concert promotions group Live Nation, and shown they can grow quickly in new areas.

The problem is that no one knows yet what that growth is worth, said Sinsky. Anyone can set up a rival to Groupon and unfortunately for them those anyone include Amazon and its former suitor Google, which beefed up it rival service this week.

Groupon has been promoting Groupon Now! A mobile service that the company said would prove its "most important innovation to date" when it launched in May. But according to Siskind's report: "Now! generated just $1m of gross billings in September, despite being available in 25 markets – only $40k per market. In other words, the product that Groupon is telling investors to view as the future of the company, still represents less than 1% of Groupon's total gross billings in North America."

In happier times promise of performance might have been enough to whet the appetite of investors. Massive growth and, at best, minimal profits is a common theme for tech firms. Very few turn out to be Google, far more turn out to be WebVan, an online grocery business that went bankrupt in 2001. Thanks to the latest global financial crisis last year's dotcom bubble seems to have burst before it was blown. When – and if – Groupon goes public, its reception will be a big test for the new generation of tech stars. Groupon's discount offer might be catching.